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Cogent Communications Reports First Quarter 2014 Results and Increases Regular Quarterly Dividend on Common Stock

Companies mentioned in this article: Cogent Communications Group, Inc.

WASHINGTON, May 8, 2014 /PRNewswire/ --

Financial and Business Highlights

    --  Service revenue for Q1 2014 of $92.9 million - an increase of 3.4% from
        $89.9 million for Q4 2013 and an increase of 9.9% from $84.6 million for
        Q1 2013
    --  Cogent approves payment of its regular quarterly dividend of $0.17 per
        common share to be paid on June 18, 2014 to shareholders of record on
        May 30, 2014
        --  The second quarter 2014 per share regular dividend of $0.17
            represents an increase of 6% from the first quarter 2014 regular
            dividend of $0.16 per share and a 31% increase from the second
            quarter 2013 regular dividend of $0.13 per share
    --  Under Cogent's return of capital program, Cogent purchased 405,000
        shares of its common stock for $14.2 million during Q1 2014 at an
        average price of $35.05 per share
    --  Traffic increased by 16% from Q4 2013 to Q1 2014 and increased by 69%
        from Q1 2013
    --  Non-GAAP gross margin percentage expanded by 90 basis points from 57.4%
        for Q4 2013 to 58.3% for Q1 2014 and expanded by 220 basis points from
        56.1% for Q1 2013
    --  EBITDA, as adjusted, for Q1 2014 of $32.1 million - an increase of 1.8%
        from $31.5 million for Q4 2013 and an increase of 13.5% from $28.3
        million for Q1 2013
    --  Cogent lit its 2,000(th) building during the quarter and there were
        2,024 buildings on the Cogent network at the end of Q1 2014
    --  41,947 customer connections were on the Cogent network at the end of Q1
        2014 - an increase of 4.4% from 40,174 customer connections at the end
        of Q4 2013 and an increase of 16.6% from 35,968 customer connections at
        the end of Q1 2013

Cogent Communications Group, Inc. (NASDAQ: CCOI) today announced service revenue of $92.9 million for the three months ended March 31, 2014, an increase of 3.4% from $89.9 million for the three months ended December 31, 2013 and an increase of 9.9% from $84.6 million for the three months ended March 31, 2013. The impact of foreign exchange negatively impacted service revenue growth from Q4 2013 to Q1 2014 by $0.1 million and positively impacted service revenue growth from Q1 2013 to Q1 2014 by $0.3 million. On a constant currency basis, service revenue grew by 3.5% from Q4 2013 to Q1 2014 and grew by 9.6% from Q1 2013 to Q1 2014.

http://photos.prnewswire.com/prnvar/20020204/DCM032LOGO

On-net service is provided to customers located in buildings that are physically connected to Cogent's network by Cogent facilities. On-net revenue was $69.1 million for the three months ended March 31, 2014; an increase of 4.6% over $66.0 million for the three months ended December 31, 2013 and an increase of 12.0% over $61.7 million for the three months ended March 31, 2013.

Off-net customers are located in buildings directly connected to Cogent's network using other carriers' facilities and services to provide the last mile portion of the link from the customers' premises to Cogent's network. Off-net revenue was $23.5 million for the three months ended March 31, 2014; an increase of 0.3% over $23.4 million for the three months ended December 31, 2013 and an increase of 5.3% over $22.3 million for the three months ended March 31, 2013.

Non-core services are legacy services, which Cogent acquired and continues to support but does not actively sell. Non-core revenue was $0.4 million for the three months ended March 31, 2014, $0.4 million for the three months ended December 31, 2013 and $0.6 million for the three months ended March 31, 2013.

Non-GAAP gross profit increased 5.1% to $54.2 million for the three months ended March 31, 2014 from $51.6 million for the three months ended December 31, 2013 and increased by 14.4% from $47.4 million for the three months ended March 31, 2013. Non-GAAP gross profit margin percentage was 58.3% for the three months ended March 31, 2014, 57.4% for the three months ended December 31, 2013, and 56.1% for the three months ended March 31, 2013.

Earnings before interest, taxes, depreciation and amortization (EBITDA), as adjusted, increased 1.8% to $32.1 million for the three months ended March 31, 2014 from $31.5 million for the three months ended December 31, 2013 and increased 13.5% from $28.3 million for the three months ended March 31, 2013. EBITDA, as adjusted, margin was 34.6% for the three months ended March 31, 2014, 35.1% for the three months ended December 31, 2013, and 33.5% for the three months ended March 31, 2013.

Basic net income per share was $0.00 for the three months ended March 31, 2014, $1.14 for the three months ended December 31, 2013 and $0.01 for the three months ended March 31, 2013. Included in basic and diluted net income per share for the quarter ended December 31, 2013 was an income tax benefit totaling $49.3 million.

Total customer connections increased 4.4% to 41,947 as of March 31, 2014 from 40,174 as of December 31, 2013 and increased 16.6% from 35,968 as of March 31, 2013. On-net customer connections increased 4.7% to 36,306 as of March 31, 2014 from 34,671 as of December 31, 2013 and increased 17.4% from 30,914 as of March 31, 2013. Off-net customer connections increased 3.1% to 5,244 as of March 31, 2014 from 5,088 as of December 31, 2013 and increased 14.2% from 4,591 as of March 31, 2013. Non-core customer connections were 397 as of March 31, 2014, 415 as of December 31, 2013 and 463 as of March 31, 2013.

The number of on-net buildings increased by 34 on-net buildings to 2,024 on-net buildings as of March 31, 2014 from 1,990 on-net buildings as of December 31, 2013, and increased by 134 on-net buildings from 1,890 on-net buildings as of March 31, 2013.

Quarterly Dividend and Increase Approved

On April 17, 2014, Cogent's board approved a dividend of $0.17 per common share payable on June 18, 2014 to shareholders of record on May 30, 2014. The second quarter 2014 regular dividend of $0.17 per share represents an increase of 6% from the first quarter 2014 regular dividend of $0.16 per share and a 31% increase from the second quarter 2013 regular dividend of $0.13 per share.

During the quarter ended March 31, 2014 Cogent purchased 405,000 share of its common stock for $14.2 million at an average price per share of $35.05 under Cogent's return of capital program. Under Cogent's return of capital program, Cogent plans on returning additional capital to its shareholders each quarter through either stock buybacks or a special dividend or a combination of stock buybacks and a special dividend. The aggregate payment under this program will total at least $10.5 million each quarter and this amount is in addition to Cogent's regular quarterly dividend payments. Since the amount paid for stock buybacks in the first quarter was more than $10.5 million Cogent will not make a special dividend payment in the second quarter under the return of capital program. The return of capital program is planned to continue until Cogent's net debt to trailing twelve months EBITDA, as adjusted, ratio reaches 2.50. Cogent's net debt to trailing twelve months EBITDA, as adjusted, ratio was 1.86 at March 31, 2014 and was 1.57 at December 31, 2013.

The payment of any future dividends and any other returns of capital will be at the discretion of Cogent's board of directors and may be reduced, eliminated or increased and will be dependent upon Cogent's financial position, results of operations, available cash, cash flow, capital requirements and other factors deemed relevant by Cogent's board of directors.

Conference Call and Website Information

Cogent will host a conference call with financial analysts at 7:30 a.m. (ET) on May 8, 2014 to discuss Cogent's operating results for the first quarter of 2014 and to discuss Cogent's expectations for full year 2014. Investors and other interested parties may access a live audio webcast of the earnings call in the "Events" section of Cogent's website at www.cogentco.com/events. A replay of the webcast, together with the press release, will be available on the website following the earnings call.

About Cogent Communications

Cogent Communications (NASDAQ: CCOI) is a multinational, Tier 1 facilities-based ISP. Cogent specializes in providing businesses with high speed Internet access, Ethernet transport, and colocation services. Cogent's facilities-based, all-optical IP network backbone provides services in over 180 markets globally.

Cogent Communications is headquartered at 1015 31st Street, NW, Washington, D.C. 20007. For more information, visit www.cogentco.com. Cogent Communications can be reached in the United States at (202) 295-4200 or via email at info@cogentco.com.


                                                                     COGENT COMMUNICATIONS GROUP, INC., AND SUBSIDIARIES

                                                                         Summary of Financial and Operational Results
                                                                         --------------------------------------------



                                                                                          Q1 2013                Q2 2013        Q3 2013         Q4 2013         Q1 2014
                                                                                          -------                -------        -------         -------         -------

    Metric ($ in 000's, except share and per share data) - unaudited
    ----------------------------------------------------------------

    On-Net revenue                                                                               $61,678               $62,693         $64,548         $66,032        $69,087
    --------------                                                                               -------               -------         -------         -------        -------

      % Change from previous Qtr.                                                                    2.1%                  1.6%            3.0%            2.3%           4.6%
      ---------------------------                                                                    ---                   ---             ---             ---            ---

    Off-Net revenue                                                                              $22,309               $22,604         $22,767         $23,438        $23,498
    ---------------                                                                              -------               -------         -------         -------        -------

    % Change from previous Qtr.                                                                      3.1%                  1.3%            0.7%            2.9%           0.3%
    ---------------------------                                                                      ---                   ---             ---             ---            ---

    Non-Core revenue (1)                                                                            $566                  $506            $446            $389           $352
    -------------------                                                                             ----                  ----            ----            ----           ----

      % Change from previous Qtr.                                                                   -3.4%                -10.6%          -11.9%          -12.8%          -9.5%
      ---------------------------                                                                   ----                 -----           -----           -----           ----

    Service revenue - total                                                                      $84,553               $85,803         $87,761         $89,859        $92,937
    -----------------------                                                                      -------               -------         -------         -------        -------

      % Change from previous Qtr.                                                                    2.3%                  1.5%            2.3%            2.4%           3.4%
      ---------------------------                                                                    ---                   ---             ---             ---            ---

    Network operations expenses (2)                                                              $37,154               $36,950         $37,327         $38,288        $38,723
    ------------------------------                                                               -------               -------         -------         -------        -------

    % Change from previous Qtr.                                                                     -0.9%                 -0.5%            1.0%            2.6%           1.1%
    ---------------------------                                                                     ----                  ----             ---             ---            ---

    Non-GAAP gross margin (2)                                                                    $47,399               $48,853         $50,434         $51,571        $54,214
    ------------------------                                                                     -------               -------         -------         -------        -------

    % Change from previous Qtr.                                                                      5.0%                  3.1%            3.2%            2.3%           5.1%
    ---------------------------                                                                      ---                   ---             ---             ---            ---

    Non-GAAP gross margin percentage (2)                                                            56.1%                 56.9%           57.5%           57.4%          58.3%
    -----------------------------------                                                             ----                  ----            ----            ----           ----

    Selling, general and administrative expenses (3)                                             $19,106               $19,215         $19,772         $20,937        $24,392
    -----------------------------------------------                                              -------               -------         -------         -------        -------

      % Change from previous Qtr.                                                                   10.4%                  0.6%            2.9%            5.9%          16.5%
      ---------------------------                                                                   ----                   ---             ---             ---           ----

    Depreciation and amortization expense                                                        $15,874               $15,900         $16,024         $16,562        $17,204
    -------------------------------------                                                        -------               -------         -------         -------        -------

    % Change from previous Qtr.                                                                     -1.6%                  0.2%            0.8%            3.4%           3.9%
    ---------------------------                                                                     ----                   ---             ---             ---            ---

    Equity-based compensation expense                                                             $2,514                $2,137          $2,061          $2,007         $2,006
    ---------------------------------                                                             ------                ------          ------          ------         ------

    % Change from previous Qtr.                                                                     -0.7%                -15.0%           -3.6%           -2.6%           0.0%
    ---------------------------                                                                     ----                 -----            ----            ----            ---

    Operating  income                                                                             $9,905               $11,601         $12,577         $12,065        $12,907
    -----------------                                                                             ------               -------         -------         -------        -------

    % Change from previous Qtr.                                                                      8.0%                 17.1%            8.4%           -4.1%           7.0%
    ---------------------------                                                                      ---                  ----             ---            ----            ---

    Net income                                                                                      $361                $1,607          $2,122         $52,599           $125
    ----------                                                                                      ----                ------          ------         -------           ----

    Basic net income  per common share                                                             $0.01                 $0.03           $0.05           $1.14          $0.00
    ----------------------------------                                                             -----                 -----           -----           -----          -----

    Diluted net income  per common share                                                           $0.01                 $0.03           $0.05           $1.10          $0.00
    ------------------------------------                                                           -----                 -----           -----           -----          -----

    Weighted average common shares - basic                                                    45,537,607            46,040,692      46,171,194      46,302,926     46,409,735
    --------------------------------------                                                      --------              --------        --------        --------       --------

    % Change from previous Qtr.                                                                      0.1%                  1.1%            0.3%            0.3%           0.2%
    ---------------------------                                                                      ---                   ---             ---             ---            ---

    Weighted average common shares - diluted                                                  46,435,677            46,769,184      46,823,167      48,800,560     46,907,360
    ----------------------------------------                                                    --------              --------        --------        --------       --------

    % Change from previous Qtr.                                                                      2.1%                  0.7%            0.1%            4.2%          -3.9%
    ---------------------------                                                                      ---                   ---             ---             ---           ----

    EBITDA, as adjusted (4)                                                                      $28,295               $29,638         $30,703         $31,548        $32,117
    ----------------------                                                                       -------               -------         -------         -------        -------

      % Change from previous Qtr.                                                                   -0.9%                  4.7%            3.6%            2.8%           1.8%
      ---------------------------                                                                   ----                   ---             ---             ---            ---

    EBITDA, as adjusted margin (4)                                                                  33.5%                 34.5%           35.0%           35.1%          34.6%
    -----------------------------                                                                   ----                  ----            ----            ----           ----

    Net cash provided by operating activities                                                    $14,962               $22,703         $14,898         $29,288        $10,636
    -----------------------------------------                                                    -------               -------         -------         -------        -------

    % Change from previous Qtr.                                                                    -53.7%                 51.7%          -34.4%           96.6%         -63.7%
    ---------------------------                                                                    -----                  ----           -----            ----          -----

    Capital expenditures                                                                         $16,316               $12,455         $10,165         $10,095        $15,623
    --------------------                                                                         -------               -------         -------         -------        -------

      % Change from previous Qtr.                                                                   58.6%                -23.7%          -18.4%           -0.7%          54.8%
      ---------------------------                                                                   ----                 -----           -----            ----           ----

    Customer Connections - end of period
    ------------------------------------

    On-Net                                                                                        30,914                31,876          33,310          34,671         36,306
    ------                                                                                        ------                ------          ------          ------         ------

      % Change from previous Qtr.                                                                    3.5%                  3.1%            4.5%            4.1%           4.7%
      ---------------------------                                                                    ---                   ---             ---             ---            ---

    Off-Net                                                                                        4,591                 4,728           4,886           5,088          5,244
    -------                                                                                        -----                 -----           -----           -----          -----

    % Change from previous Qtr.                                                                      2.8%                  3.0%            3.3%            4.1%           3.1%
    ---------------------------                                                                      ---                   ---             ---             ---            ---

    Non-Core (1)                                                                                     463                   453             443             415            397
    -----------                                                                                      ---                   ---             ---             ---            ---

      % Change from previous Qtr.                                                                   -1.7%                 -2.2%           -2.2%           -6.3%          -4.3%
      ---------------------------                                                                   ----                  ----            ----            ----           ----

    Total                                                                                         35,968                37,057          38,639          40,174         41,947
    -----                                                                                         ------                ------          ------          ------         ------

      % Change from previous Qtr.                                                                    3.3%                  3.0%            4.3%            4.0%           4.4%
      ---------------------------                                                                    ---                   ---             ---             ---            ---

    Other - end of period
    ---------------------

    Buildings On-Net                                                                               1,890                 1,921           1,955           1,990          2,024
    ----------------                                                                               -----                 -----           -----           -----          -----

    Employees                                                                                        619                   633             673             706            724
    ---------                                                                                        ---                   ---             ---             ---            ---


    (1)      Consists of legacy services
             of companies whose assets
             or businesses were
             acquired by Cogent,
             primarily including voice
             services (only provided in
             Toronto, Canada).

    (2)      Network operations expense
             excludes equity-based
             compensation expense of
             $155, $126, $114, $112 and
             $113 in the three months
             ended March 31, 2013, June
             30, 2013, September 30,
             2013, December 31, 2013
             and March 31, 2014,
             respectively.  Non-GAAP
             gross margin represents
             service revenue less
             network operations
             expense, excluding equity-
             based compensation and
             amounts shown separately
             (depreciation expense).

    (3)      Excludes equity-based
             compensation expense of
             $2,359,  $2,011, $1,947,
             $1,895 and $1,893 in the
             three months ended March
             31, 2013, June 30, 2013,
             September 30, 2013,
             December 31, 2013 and
             March 31, 2014,
             respectively.

    (4)      See schedule of non-GAAP
             metrics below for
             definition and
             reconciliation to GAAP
             measures. EBITDA, as
             adjusted, includes net
             gains (losses) from asset
             related transactions of
             $2, $41, $914 and $2,295
             in the three months ended
             March 31, 2013 and
             September 30, 2013,
             December 31, 2013 and
             March 31, 2014,
             respectively.

Schedule of Non-GAAP Measures

EBITDA and EBITDA, as adjusted

EBITDA represents net cash flows from operating activities plus changes in operating assets and liabilities, cash interest expense and income tax expense. Management believes the most directly comparable measure to EBITDA calculated in accordance with generally accepted accounting principles in the United States, or GAAP, is cash flows provided by operating activities.

EBITDA, as adjusted, represents EBITDA plus net gains (losses) on asset related transactions. The Company believes EBITDA, as adjusted, is a useful measure of its ability to service debt, fund capital expenditures and expand its business. EBITDA, as adjusted, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. The Company also believes that EBITDA is a frequently used measure by securities analysts, investors, and other interested parties in their evaluation of issuers.

EBITDA and EBITDA, as adjusted, are not recognized terms under GAAP and accordingly, should not be viewed in isolation or as a substitute for the analysis of results as reported under GAAP, but rather as a supplemental measure to GAAP. For example, EBITDA is not intended to reflect the Company's free cash flow, as it does not consider certain current or future cash requirements, such as capital expenditures, contractual commitments, and changes in working capital needs, interest expenses and debt service requirements. The Company's calculations of EBITDA and EBITDA, as adjusted, may also differ from the calculation of EBITDA and EBITDA, as adjusted, by its competitors and other companies and as such, its utility as a comparative measure is limited.


                                                                             COGENT COMMUNICATIONS GROUP, INC., AND SUBSIDIARIES
                                                                             ---------------------------------------------------

                                                    EBITDA, as adjusted, is reconciled to cash flows provided by operating activities in the table below.


                                                                                           Q1  2013                       Q2 2013         Q3 2013              Q4 2013          Q1 2014
                                                                                           --------                       -------         -------              -------          -------

    ($ in 000's) - unaudited
    ------------------------

    Net cash flows provided by operating activities                                                       $14,962                $22,703               $14,898         $29,288          $10,636
    -----------------------------------------------                                                       -------                -------               -------         -------          -------

    Changes in operating assets and liabilities                                                             5,365                 (1,446)                6,771          (8,158)           9,048
    -------------------------------------------                                                             -----                 ------                 -----          ------            -----

    Cash interest expense and income tax expense                                                            7,966                  8,381                 8,993           9,504           10,138
    --------------------------------------------                                                            -----                  -----                 -----           -----           ------

    Gains on asset related transactions                                                                         2                      -                    41             914            2,295
    -----------------------------------                                                                       ---                    ---                   ---             ---            -----

    EBITDA, as adjusted                                                                                   $28,295                $29,638               $30,703         $31,548          $32,117
    -------------------                                                                                   -------                -------               -------         -------          -------


    Impact of foreign currencies ("constant currency" impact) on change in sequential quarterly service revenue
    -----------------------------------------------------------------------------------------------------------

    ($ in 000's) -
     unaudited                 Q1 2014
    --------------             -------

    Service revenue, as
     reported - Q1 2014            $92,937
    -------------------            -------

    Impact of foreign
     currencies on
     service revenue                    98
    -----------------                  ---

    Service revenue - Q1
     2014, as adjusted
     (1)                           $93,035
    --------------------           -------

    Service revenue, as
     reported - Q4 2013            $89,859
    -------------------            -------

    Constant currency
     increase from Q4
     2013 to Q1 2014 -
     (Service revenue, as
     adjusted for Q1 2014
     less service
     revenue, as reported
     for Q4 2013)                   $3,176
    ---------------------           ------

    Percent increase
     (Constant currency
     increase from Q4
     2013 to Q1 2014
     divided by service
     revenue, as reported
     for Q4 2013)                      3.5%
    ---------------------              ---


    (1)      Service revenue, as
             adjusted, is determined
             by translating the
             service revenue for the
             three months ended March
             31, 2014 at the average
             foreign currency
             exchange rates for the
             three months ended
             December 31, 2013. The
             Company believes that
             disclosing quarterly
             revenue growth without
             the impact of foreign
             currencies on service
             revenue is a useful
             measure of revenue
             growth. Service revenue,
             as adjusted, is an
             integral part of the
             internal reporting and
             planning system used by
             management as a
             supplement to GAAP
             financial information.


    Impact of foreign currencies ("constant currency" impact) on change in prior year quarterly service revenue
    -----------------------------------------------------------------------------------------------------------

    ($ in 000's) -
     unaudited                  Q1 2014
    --------------              -------

    Service revenue, as
     reported - Q1 2014             $92,937
    -------------------             -------

    Impact of foreign
     currencies on service
     revenue                           (280)
    ----------------------             ----

    Service revenue - Q1
     2014, as adjusted (2)          $92,657
    ----------------------          -------

    Service revenue, as
     reported - Q1 2013             $84,553
    -------------------             -------

    Constant currency
     increase from Q1 2013
     to Q1 2014 -(Service
     revenue, as adjusted
     for Q1 2014 less
     service revenue, as
     reported for Q1 2013)           $8,104
    ----------------------           ------

    Percent increase
     (Constant currency
     increase from Q1 2013
     to Q1 2014 divided by
     service revenue, as
     reported for Q1 2013)              9.6%
    ----------------------              ---


    (2)      Service revenue, as
             adjusted, is determined
             by translating the
             service revenue for the
             three months ended March
             31, 2014 at the average
             foreign currency
             exchange rates for the
             three months ended March
             31, 2013. The Company
             believes that disclosing
             quarterly revenue growth
             without the impact of
             foreign currencies on
             service revenue is a
             useful measure of
             revenue growth. Service
             revenue, as adjusted, is
             an integral part of the
             internal reporting and
             planning system used by
             management as a
             supplement to GAAP
             financial information.

Net debt to trailing 12 months EBITDA, as adjusted, ratio

Under Cogent's return of capital program Cogent plans on returning an additional at least $10.5 million to its shareholders each quarter through either stock buybacks or a special dividend or a combination of stock buybacks and a special dividend. The aggregate payment under this program will total at least $10.5 million each quarter and this amount is in addition to Cogent's regular quarterly dividend payments. The program is planned to continue until Cogent's net debt to trailing twelve months EBITDA, as adjusted, ratio reaches 2.50. Cogent's net debt to trailing twelve months EBITDA, as adjusted, ratio was 1.57 at December 31, 2013 and 1.86 at March 31, 2014 as shown below.


    ($ in 000's) -           As of December 31, 2013   As of March 31,
     unaudited                                         2014
    --------------           -----------------------  ----------------

    Cash and cash
     equivalents                            $304,866           $263,747
    -------------                           --------           --------

    Debt
    ----

    Capital leases -
     current portion                          $9,252             $8,121
    ----------------                          ------             ------

    Convertible notes - par
     value                                   $91,978            $91,978
    -----------------------                  -------            -------

    Capital leases - long
     term                                   $152,527           $154,233
    ---------------------                   --------           --------

    Senior secured notes -
     par value                              $240,000           $240,000
    ----------------------                  --------           --------

    Total debt                              $493,757           $494,332
    ----------                              --------           --------

    Total net debt                          $188,891           $230,585
    --------------                          --------           --------

    Trailing 12 months
     EBITDA, as adjusted                    $120,188           $124,006
    --------------------                    --------           --------

    Total net debt to
     trailing 12 months                         1.57               1.86

    EBITDA, as adjusted
    -------------------

Cogent's SEC filings are available online via the Investor Relations section of www.cogentco.com or on the Securities and Exchange Commission's website at www.sec.gov.


                                                                                       COGENT COMMUNICATIONS GROUP, INC., AND SUBSIDIARIES

                                                                                              CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                                            AS OF MARCH 31, 2014 AND DECEMBER 31, 2013

                                                                                                (IN THOUSANDS, EXCEPT SHARE DATA)


                                                                                                                                                   March 31,              December 31,
                                                                                                                                                          2014                2013
                                                                                                                                                          ----                ----

                                                                                                                                                (Unaudited)

    Assets

    Current assets:

    Cash and cash equivalents                                                                                                                                   $263,747                $304,866

    Accounts receivable, net of allowance for doubtful accounts of $2,192 and $1,871, respectively                                                      33,126              30,628

    Prepaid expenses and other current assets                                                                                                           23,781              18,777
                                                                                                                                                        ------              ------

    Total current assets                                                                                                                               320,654             354,271

    Property and equipment, net                                                                                                                        346,185             341,193

    Deferred tax assets - noncurrent                                                                                                                    49,710              50,861

    Deposits and other assets - $448 and $448 restricted, respectively                                                                                   8,698               8,776
                                                                                                                                                         -----               -----

    Total assets                                                                                                                                                $725,247                $755,101
                                                                                                                                                                ========                ========


    Liabilities and stockholders' equity

    Current liabilities:

    Accounts payable                                                                                                                                             $16,441                 $14,098

    Accrued liabilities                                                                                                                                 27,221              31,465

    Convertible senior notes - current portion, net of discount of $1,414 and $3,099, respectively                                                      90,564              88,879

    Current maturities, capital lease obligations                                                                                                        8,121               9,252
                                                                                                                                                         -----               -----

    Total current liabilities                                                                                                                          142,347             143,694

    Senior secured notes including premium of $5,131 and $5,423, respectively                                                                          245,131             245,423

    Capital lease obligations, net of current maturities                                                                                               154,233             152,527

    Other long term liabilities                                                                                                                         20,536              19,965
                                                                                                                                                        ------              ------

    Total liabilities                                                                                                                                  562,247             561,609
                                                                                                                                                       -------             -------

    Commitments and contingencies:

    Stockholders' equity:

    Common stock, $0.001 par value; 75,000,000 shares authorized; 46,951,593 and 47,334,218 shares issued and outstanding, respectively                     47                  47

    Additional paid-in capital                                                                                                                         496,453             508,256

    Accumulated other comprehensive income                                                                                                               1,674               2,136

    Accumulated deficit                                                                                                                               (335,174)           (316,947)
                                                                                                                                                      --------            --------

    Total stockholders' equity                                                                                                                         163,000             193,492
                                                                                                                                                       -------             -------

    Total liabilities and stockholders' equity                                                                                                                  $725,247                $755,101
                                                                                                                                                                ========                ========



                                                                                       COGENT COMMUNICATIONS GROUP, INC., AND SUBSIDIARIES

                                                                                    CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                                                                                   FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND MARCH 31, 2013

                                                                                        (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)


                                                                                                                                                 Three Months             Three Months
                                                                                                                                                     Ended                 Ended
                                                                                                                                                March 31, 2014            March 31, 2013
                                                                                                                                                --------------            --------------

                                                                                                                                                  (Unaudited)             (Unaudited)

    Service revenue                                                                                                                                              $92,937                 $84,553

    Operating expenses:

    Network operations (including $113 and $155 of equity-based compensation                                                                            38,836              37,309

       expense, respectively, exclusive of depreciation and amortization shown

       separately below)

    Selling, general, and administrative (including $1,893 and $2,359 of equity-based                                                                   26,285              21,465

       compensation expense, respectively)

    Gains on equipment                                                                                                                                  (2,295)                 -

    Depreciation and amortization                                                                                                                       17,204              15,874
                                                                                                                                                        ------              ------

    Total operating expenses                                                                                                                            80,030              74,648

    Operating income                                                                                                                                    12,907               9,905

    Interest income and other, net                                                                                                                         137                 658

    Interest expense                                                                                                                                   (11,303)            (9,869)
                                                                                                                                                       -------              ------

    Income before income taxes                                                                                                                           1,741                 694

    Income tax (provision) benefit                                                                                                                      (1,616)               (333)
                                                                                                                                                        ------                ----

    Net income                                                                                                                                                      $125                    $361
                                                                                                                                                                    ====                    ====


    Comprehensive income (loss):

    Net income                                                                                                                                                      $125                    $361

    Foreign currency translation adjustment                                                                                                               (462)            (1,793)
                                                                                                                                                          ----              ------

    Comprehensive income (loss)                                                                                                                                    $(337)                $(1,432)
                                                                                                                                                                   =====                 =======


    Net income per common share:

    Basic and diluted net income per common share                                                                                                                  $0.00                   $0.01


    Dividends declared per common share                                                                                                                            $0.39                   $0.12


    Weighted-average common shares - basic                                                                                                          46,409,735            45,537,607


    Weighted-average common shares - diluted                                                                                                        46,907,360            46,435,677



                                                                                       COGENT COMMUNICATIONS GROUP, INC., AND SUBSIDIARIES

                                                                                              CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                   FOR THE THREE MONTHS ENDED MARCH 31, 2014 AND MARCH 31, 2013

                                                                                                          (IN THOUSANDS)


                                                                                                                                                 Three months             Three months
                                                                                                                                                     Ended                 Ended
                                                                                                                                                March 31, 2014            March 31, 2013
                                                                                                                                                --------------            --------------

                                                                                                                                                  (Unaudited)             (Unaudited)

    Cash flows from operating activities:

    Net income                                                                                                                                                      $125                    $361

    Adjustments to reconcile net income to net cash provided by operating activities:

    Depreciation and amortization                                                                                                                       17,204              15,874

    Amortization of debt discount and premium                                                                                                            1,415               1,580

    Equity-based compensation expense (net of amounts capitalized)                                                                                       2,006               2,514

    Gains-dispositions of assets and other, net                                                                                                         (2,258)                135

    Deferred income taxes                                                                                                                                1,229                  59

    Changes in operating assets and liabilities:

    Accounts receivable                                                                                                                                 (2,554)            (3,175)

    Prepaid expenses and other current assets                                                                                                           (5,143)            (2,724)

    Deposits and other assets                                                                                                                               78                  24

    Accounts payable, accrued liabilities and other long-term liabilities                                                                               (1,466)                314
                                                                                                                                                        ------                 ---

    Net cash provided by operating activities                                                                                                           10,636              14,962
                                                                                                                                                        ------              ------

    Cash flows from investing activities:

    Purchases of property and equipment                                                                                                                (15,623)           (16,316)

    Proceeds from dispositions of assets                                                                                                                    27                   2
                                                                                                                                                           ---                 ---

    Net cash used in investing activities                                                                                                              (15,596)           (16,314)
                                                                                                                                                       -------             -------

    Cash flows from financing activities:

    Dividends paid                                                                                                                                     (18,352)            (5,489)

    Purchases of common stock                                                                                                                          (14,196)                 -

    Proceeds from exercises of stock options                                                                                                               155                 215

    Principal payments of capital lease obligations                                                                                                     (3,379)            (4,964)
                                                                                                                                                        ------              ------

    Net cash used in financing activities                                                                                                              (35,772)           (10,238)
                                                                                                                                                       -------             -------

    Effect of exchange rates changes on cash                                                                                                              (387)               (735)
                                                                                                                                                          ----                ----

    Net decrease in cash and cash equivalents                                                                                                          (41,119)           (12,325)

    Cash and cash equivalents, beginning of period                                                                                                     304,866             247,285
                                                                                                                                                       -------             -------

    Cash and cash equivalents, end of period                                                                                                                    $263,747                $234,960
                                                                                                                                                                ========                ========


    Supplemental disclosure of non-cash investing and financing activities:

    Non-cash component of network equipment obtained in exchange transactions                                                                                     $2,235         $             -
                                                                                                                                                                  ======       ===           ===

    Capital lease obligations incurred                                                                                                                            $4,224                 $18,842
                                                                                                                                                                  ======                 =======

Except for historical information and discussion contained herein, statements contained in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to statements identified by words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "projects" and similar expressions. The statements in this release are based upon the current beliefs and expectations of Cogent's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Numerous factors could cause or contribute to such differences, including future economic instability in the global economy or a contraction of the capital markets which could affect spending on Internet services and our ability to engage in financing activities; the impact of changing foreign exchange rates (in particular the Euro to USD and Canadian dollar to USD exchange rates) on the translation of our non-USD denominated revenues, expenses, assets and liabilities; legal and operational difficulties in new markets; the imposition of a requirement that we contribute to the U.S. Universal Service Fund and similar funds in other countries; changes in government policy and/or regulation, including net neutrality rules by the United States Federal Communications Commission and in the area of data protection; increasing competition leading to lower prices for our services; our ability to attract new customers and to increase and maintain the volume of traffic on our network; the ability to maintain our Internet peering arrangements on favorable terms; our reliance on an equipment vendor, Cisco Systems Inc., and the potential for hardware or software problems associated with such equipment; the dependence of our network on the quality and dependability of third-party fiber providers; our ability to retain certain customers that comprise a significant portion of our revenue base; the management of network failures and/or disruptions; and outcomes in litigation as well as other risks discussed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, our annual report on Form 10-K for the fiscal year ended December 31, 2013 and our quarterly report on Form 10-Q for the quarter ended March 31, 2014 to be filed with the Securities and Exchange Commission. Cogent undertakes no duty to update any forward-looking statement or any information contained in this press release or in other public disclosures at any time.

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SOURCE Cogent Communications Group, Inc.